Nov.27, 2002

A degenerating empire

James Petras


The degeneration of Empires from Roman times to the present involves two interelated processes:

(1) Massive corruption of the political class and indebtedness of its principle cities leading to social decay;

(2) Overweening imperial hubris, which leads imperial publicists and politicians to engage in the most blatant justifications of imperialist wars which provoke violent resistance within and outside the empire.

A Bankrupt City: Empire and Political Corruption

Bigger than the Enron Scandal, the "off the books" debt incurred by the then mayor of New York, Rudolph Guiliani, has bankrupted New York City. The newly elected mayor, multi-millionaire Bloomberg confronts a city debt of over $25 billion dollars, most of it in "off the budget" debts incurred by government agencies during Guiliani's term of office. In other words, Guiliani covered up debts at least five times greater than the biggest corporate swindle in the history of US business.

How did Guiliani cover up the bankruptcy of New York City? First by budget manipulation. His budget accounting did not include the growing debt of several large scale agencies. Secondly, he reported only those agencies with the least debt. When he left office the "official debt" was about $5 billion, blamed on the "terrorist attack of 9/11" and the inadequate aid from the Federal Government. Only when Guiliani left office did the incoming mayor discover that the books were "cooked" by his predecessor and that New York City was in a deep financial crisis requiring "deep cuts" in spending, on health, education and social services as well as increases in regressive taxes to avoid collapse.

Why did Guiliani engage in the cover-up, or more basically what accounts for the huge deficit, after years of a Wall Street boom? The ex-Mayor provided hundreds of millions of dollars in tax concessions to every big real estate developer in New York; he spent billions in incentives to retain and promote New York as a "global financial, insurance, and real estate center and tourist center, undermining the previously diverse economy. In effect Guiliani turned New York into a "one product economy" – services – which were profoundly vulnerable to the volatility of the stock market.

During the 1990's speculative boom, Guiliani's development strategy seemed to succeed: tax revenues from Wall Street increased and the decline in unemployment caused the crime rate to decline, as it did in the rest of the country. However with the collapse of the speculative bubble, rampant financial and corporate fraud on Wall Street and the felonious accounting audits, New York City's revenues declined. This crisis preceded 9/11/2001. The latter event only accentuated the already existing structural crises. Instead of admitting the failure of his "service economy strategy", Giuliani exacerbated the fiscal crises, by providing further tax concessions to Wall Street, and the real estate billionaires. As the city's debt grew geometrically, Guiliani shifted more and more of the indebted accounts "off " the official books. In other words the City government followed the practices of Wall Street only on a much larger scale. In a similar vein, President Bush is understating the current budget deficit of $400 billion dollars by 50% by raiding the Social Security funds in order to further lower taxes for the super-rich. In other words, corruption and fraud are not merely problems affecting Wall Street or big business, but permeate the most important political institutions. The problem of large scale, long term corruption within US political and economic institutions is not only an ethical issue but a systematic problem: Formally the US is a capitalist democracy, in which politicians and business people are accountable to the citizens and shareholders. But in practice, politicians have become totally immersed in the world of speculative capital, utilizing tax revenues for the singular purpose of subsidizing big business and reducing corporate taxes. In order to shift massive revenues to the rich, politicians engage in every variety of subterfuge – including "off the books" accounting and other forms of fraud and deception. In the case of New York City, neither the new mayor, nor the mass media – including the New York Times – expose and denounce these political swindles because they have been the prime backers of the financial – speculative-service economy strategy. In New York City the beneficiaries of swindles included the Brotherhood of Sandy Weil of Citibank, Zuckerman the real estate mogul, Hank Greenberg the insurance kingpin and ex-Mayor Rudolph Guiliani. But for the US media they are the untouchables. Even as Elliot Spitzer, the State Attorney General of New York exposes some of the most blatant cases of corporate malfeasance on Wall Street, Guiliani is being considered as the chief executive officer of scandle-ridden WorldCom. Perhaps the board of directors of World.Com are impressed by Guiliani's success in cooking the books of the City of New York…leaving the "Global City" $25 billion in debt and coming out of office smelling like a rose.

Other Signs of Degeneration

The degeneration of the Empire is seen in the arrogant displays of cynical duplicity of top Bush officials. Richard Perle, one of Bush's top military adviser boasted that "the US would attack Iraq even if UN inspectors failed to find weapons." Perle, a close friend of Israel's Ariel Sharon, stated "I cannot see how Hans Blix can state more than he can know. All he can know is the results of his own investigation. And that does not prove Saddam does not have weapons of mass destruction." In other words 300 inspectors working 24 hours a day throughout Iraq will not provide knowledge, to convince a political psychopath like Perle who has the ear of the finger on the trigger. The US has already decided to invade Iraq and the whole inspection process is a charade.

Empire Expands the Republic Declines

While the food lines grow by 25-30% across the US, President Bush is increasing military and economic aid to Israel from $2.4 billion to $14 billion. There is no dissent in the US Congress – the Jewish lobby eliminated the two black congress people who might have given priority to the US poor over funding the crisis ridden Israeli military state.

With the end of the economic bubble, crime is on the increase in the US, especially in New York City. Mayor Obregon should take note that it was the economic expansion and relative full employment that reduced crime, not the police- state tactics of Guiliani's police.

Everywhere in the US there is mounting suspicion about the circumstances surrounding the events of 9/11. Some questions have even been raised about the complicity of the Bush Administration, or at least "passive tolerance: to launch a series of imperial wars. After initial resistance Bush has finally established a commission to investigate the terrorist attack and appointed an expert practitioner of terrorism, the notorious Henry Kissinger, sought by several governments around the world in connection with crimes against humanity. The appointment was entirely appropriate: a degenerate imperial clique involved in terrorism around the world selects a veteran terrorist to exonerate it of any complicity in the killing of its own citizens. An accused felon, Kissinger is the ideal selection to exonerate a degenerate imperial regime.

The New Years

The year 2003 is going to be a year of bankrupt cities, imperial and civil wars. Living standards will plunge and the economies of North America and Europe will enter into a deep recession. The Bush Administration's blatant lies and arrogant displays of power should leave little room for reformist illusion.

The year 2003 can also be the year of major uprising and imperial defeats in the Arab East, in the Andean countries and beyond. A revitalized alliance of workers and anti-militarists forces in Europe will emerge. Perhaps the swindles, wars and lies may become so odious, the food lines may grow so long, the rich and powerful so arrogant and abusive that even the the USA, people will soon discover that the real terrorists are right there smiling and waving on their own TV screens.

OpEd for La Jornada